Platform Fintechs Are Coming – How Should Startups Respond?
Platform Fintechs Are Coming – How Should Startups Respond?
There’s a key new player in the global financial services space. I’ll call them the Platform Fintechs – or the “PlatFins.” Super platform technology companies (most famously Facebook, Google, Tencent, Alibaba, and their ilk) are playing an increasingly central role in the financial lives of consumers everywhere, including those that have been kept out of the financial system.
The question of the role PlatFins will play in inclusive finance is a critical one for us at Accion Venture Lab — and also for the fintech startups that have already been working to make digital financial services available for all.
PlatFins initiate relationships with consumers for many reasons — they can start with ride-hailing like Go-Jek in Indonesia, food delivery like Rappi in Brazil and Postmates in the US, or even B2B sales like Alibaba in China and IndiaMart in India.
But all of them end up as an app (or several) on hundreds of millions of consumers’ phones, connecting the supply and demand of core services . Over time, these companies provide other services — Go-Jek offers auto-care, Alibaba provides chat and e-commerce (and just about everything else).
Ultimately, many of these platforms become PlatFins, incorporating a slew of financial services that are highly relevant to the consumers they have started to know so well.
Most of these companies start by solving a hard problem that isn’t financial services — like moving things around cities with poor infrastructure.
They begin to incorporate financial services in their offerings early on because they need to — fluid and digital payments are critical to the ability of the platform itself to operate optimally.
Part of what makes Uber so popular is that you don’t need to pull out cash to pay. The same goes for an e-commerce transaction on Amazon. These companies are solving payments because they need to. They are then coming to the natural conclusion that they can do more.
